Forex

Forex Enterprise - A Full Review

2007-12-05T06:11:00.000-08:00

Forex Enterprise - A Full Review

A new marketing course to hit the internet by Nick Marks that advertises earnings of $1000 a day and $30,000 a month respectively. This turnkey system generating multiple streams of income is relatively new and so it is my pleasure to review it for you.

After purchasing you are given a login page where you are introduced to the system which is in website format. Everything is easy to access and well organized.

After Nick gives you a little pep talk about positive thinking and goal setting, you will be introduced to his first recommendation: join Coastal Vacations. While not a part of his main Forex system this is a recommendation I could've done without.

In the pay per click section you are given a large list of keywords that Nick found convert really well with his system. Some of the keywords in the list have bid prices already attached to them so you can get front page exposure.

The course also has $50 in free adwords credit that unfortunately only works with new accounts so I was out of luck. If you don't already have an account this is worth the price of the course alone.

The forex course shows you some inexpensive traffic methods and provides links to these sources. He also covers stuff like pop-over ads, e-mail lists and autoresponders. Not bad information by any means, and is an alternative to pay per click advertising if you have a smaller budget.

He has an ebook package that seemed like it was going to be really cool as there were dozens of bonus ebooks and software programs covering everything from creating ebooks and website templates, to getting top positions in the major search engines.

As I took a closer look at this package I realized there were some bargain bin informational products included. However, there were also alot of goodies in there as well that I found rather useful. You get so many ebooks and software in here that it really is worth far more than the price of the course.

There is a section on becoming an Ebay power seller in 90 days that goes into a fair amount of detail and wasn't bad. However, Ebay isn't something I have ever been particularly interested in doing. There is also a section on baccarat strategies that I had no interest in.

One of the last sections of his course introduces you to e-currency exchanging using the DXINONE system. It is a great way to acquaint yourself with this increasingly popular opportunity without having to buy standalone e-currency courses which can cost a couple hundred dollars.

The author has combined several effective ways to earn money online and rolled them all into one course. While I didn't jump up and down about all of his strategies, the free ebooks, software, and adwords credit make Forex Enterprise worth the money.

by Joey Merrick

http://www.internet-marketing-reviews.net

6 Advantages

2007-12-05T06:09:00.000-08:00

The 6 Advantages Forex Trading Has Over Other Investments

There are many different advantages to trading forex instead of futures or stocks, such as:

1. Lower Margin

Just like futures and stock speculation, a forex trader has the ability to control a large amount of the currency basically by putting up a small amount of margin. However, the margin requirements that are needed for trading futures are usually around 5% of the full value of the holding, or 50% of the total value of the stocks, the margin requirements for forex is about 1%. For example, margin required to trade foreign exchange is $1000 for every $100,000. What this means is that trading forex, a currency trader's money can play with 5-times as much value of product as a futures trader's, or 50 times more than a stock trader's. When you are trading on margin, this can be a very profitable way to create an investment strategy, but it's important that you take the time to understand the risks that are involved as well. You should make sure that you fully understand how your margin account is going to work. You will want to be sure that you read the margin agreement between you and your clearing firm. You will also want to talk to your account representative if you have any questions.

The positions that you have in your account could be partially or completely liquidated on the chance that the available margin in your account falls below a predetermined amount. You may not actually get a margin call before your positions are liquidated. Because of this, you should monitor your margin balance on a regular basis and utilize stop-loss orders on every open position to limit downside risk.

2. No Commission and No Exchange Fees

When you trade in futures, you have to pay exchange and brokerage fees. Trading forex has the advantage of being commission free. This is far better for you. Currency trading is a worldwide inter-bank market that lets buyers to be matched with sellers in an instant.

Even though you do not have to pay a commission charge to a broker to match the buyer up with the seller, the spread is usually larger than it is when you are trading futures. For example, if you were trading a Japanese Yen/US Dollar pair, forex trade would have about a 3 point spread (worth $30). Trading a JY futures trade would most likely have a spread of 1 point (worth $10) but you would also be charged the broker's commission on top of that. This price could be as low as $10 in-and-out for self-directed online trading, or as high as $50 for full-service trading. It is however, all inclusive pricing though. You are going to have to compare both online forex and your specific futures commission charge to see which commission is the greater one.

3. Limited Risk and Guaranteed Stops

When you are trading futures, your risk can be unlimited. For example, if you thought that the prices for Live Cattle were going to continue their upward trend in December 2003, just before the discovery of Mad Cow Disease found in US cattle. The price for it after that fell dramatically, which moved the limit down several days in a row. You would not have been able to leave your position and this could have wiped out the entire equity in your account as a result. As the price just kept on falling, you would have been obligated to find even more money to make up the deficit in your account.

4. Rollover of Positions

When futures contracts expire, you have to plan ahead if you are going to rollover your trades. Forex positions expire every two days and you need to rollover each trade just so that you can stay in your position.

5. 24-Hour Marketplace

With futures, you are generally limited to trading only during the few hours that each market is open in any one day. If a major news story breaks out when the markets are closed, you will not have a way of getting out of it until the market reopens, which could be many hours away. Forex, on the other hand, is a 24/5 market. The day begins in New York, and follows the sun around the globe through Europe, Asia, Australia and back to the US again. You can trade any time you like Monday-Friday.

6. Free market place

Foreign exchange is perhaps the largest market in the world with an average daily volume of US$1.4 trillion. That is 46 times as large as all the futures markets put together! With the huge number of people trading forex around the globe, it is very hard for even governments to control the price of their own currency.

by David Morrison

http://www.ForexTrader123.com

Forex The Future Investment

2007-12-05T06:08:00.000-08:00

Forex The Future Investment

There are many many advantages over the various other ways of investing. First of all it is a 24 hr market, except for weekends of course. You have the US market then the european and then the Asian. One of the great times to trade is during the over lapping periods. The USA and european overlap between 5am & 9am eastern and the Euro & Asian between 11pm & 1am eastern. Usually the busiest time and best to trade.

The is also the risk factor for the accounts. With futures and options you can get margin calls that can wipe you out. If you get caught in a bad trade not only do you lose the money in the account but you may have to come up with alot more from your pocket. It can be very risking. But not in Forex. Worst case senerio you could lose whats in you account. But you would have to do something really stupid. Like making a big trade on a Fundamental day and leave it alone. If market takes a bad move and you weren't there. OOOPS. But That wouldn't happen with a smarth trader.

Then there are the demo accounts which is an account where you can trade using all the right things, platform,charts,and information. But you are using play money, or what we call paper trading too.

Plus with Forex you have a mini account. Instead of needing thousands of dollars to get into it. You can open an account with as little as $300.00. Now of course you will be trading at 1 tenth of a trade. IN other words you controling 10,000 instead of 100,000.00 These are call lots. Which also means you will only risk 1 tenth too!

So if you would love to learn to do investing and not have near the risk you really need to take a closer look at Forex trading.

by Mike Pachuta

http://www.SUCCESSFUL-FOREX.COM/

Investing in Forex

2007-12-05T06:07:00.000-08:00

Investing in Forex

Investing in foreign currencies is a relatively new avenue of investing. There are considerably fewer people are aware of this market than there are people aware of several other avenues of investing. Trading foreign currency, also known as forex, is the most lucrative investment market that exists. There are several factors that make this true among which, successful forex traders earn realistic profits of one hundred plus percent each month. Compared to some of the better known investment markets such as corporate stocks, this is an unheard of return on investment. It's very necessary to mention here that a person who invests in forex must, without exception, make it a point to learn the detailed, but simple strategies and information surrounding the market. This very fact is what makes the difference between successful forex traders and other traders.

A few additional points, which create such powerful leverage for investors within the forex market are: The amount of capital required to begin investing in the market is only three hundred dollars. For the most part, any other investment market is going to demand thousands of dollars of the investor in the beginning. Also, the market offers opportunities to profit regardless what the direction of the market may be; In most commonly known markets investors sit and wait for the market to begin an up trend before entering a trade. Even then, investors, as a rule must sit and wait some more to be able to exit the trade with a nice profit. Given that the forex market produces several up, down, and sideways trends in a single day, it can easily be seen that forex stands head and shoulders above other markets. Additionally there are trading strategies, which are taught that provide for compounded profits; these are profits on top of profits. In addition, free demo accounts are available within the industry of forex trading, which facilitate the sharpening of skills without the risk losing any capital. And the advantage regarding the time factor in trading foreign currency is a very attractive point for any investor. Compared to one of the most sought after avenues of investing, which often requires forty or more hours each week, namely in the real-estate market, the forex market requires a much smaller demand on the investor's time. Forex trading requires approximately ten to fifteen hours each week to earn a full time income. It's easy to see that the advantages and great leverage that exist in the forex market, make it among the most lucrative, time liberating, and easy to enter by far.

I hope this information gives you a clear understanding of how you can turn your investing into a true method of making your money work harder for you.

by Joe Clinton

www.joeforex.com

Glossary of economic terms

2007-11-30T12:18:00.000-08:00

Glossary of economic terms

Auto Sales

Car sales are tremendously important to the US economy but their volatility can make them an unreliable indicator. New models introduced at the end of summer and in early spring tend to have a disproportionate influence on sales figures. That said, strong figures are a good sign that consumer demand is picking up. They can be seen as indicating higher future production if demand is sustained over three or four months. The size of the item in question and the timeliness of the release allow auto sales to be a useful leading indicator of retail sales and personal consumption expenditures data.

Release Date: Around the 13th of each month
Release Time: 13:30 GMT

Balance of Payments (BOP)

The Balance of Payments (BOP) is the method countries use to monitor all international monetary transactions at a specific period of time. Usually, the BOP is calculated every quarter and every calendar year. All trades conducted by both the private and public sectors are accounted for in the BOP in order to determine how much money is going in and out of a country. If a country has received money, this is known as a credit, and, if a country has paid or given money, the transaction is counted as a debit. Theoretically, the BOP should be zero, meaning that assets (credits) and liabilities (debits) should balance. But in practice this is rarely the case and, thus, the BOP can tell the observer if a county has a deficit or a surplus and from which part of the economy the discrepancies are stemming.

Balance of Trade

The largest component of a country's balance of payments. It is the difference between exports and imports. Debit items include imports, foreign aid, domestic spending abroad and domestic investments abroad. Credit items include exports, foreign spending in the domestic economy, and foreign investments in the domestic economy. The US merchandise trade balance has been in a deficit since the mid-1970s. Rising deficits can be reflective of increased consumption, which can be a sign of a strengthening economy.

Release Date: Around the 12th of each month
Release Time: 13:30 GMT

Beige Book Fed Survey

Officially known as the Survey on Current Economic Conditions, the Beige Book is published eight times per year by a Federal Reserve Bank, containing anecdotal information on current economic and business conditions in its District through reports from Bank and Branch directors, and interviews with key business contacts, economists, market experts, and other sources. The Beige Book highlights the activity information by District and sector. The survey normally covers a period of about 4-weeks in duration, and is released two weeks prior to each FOMC meeting, which is also held eight times per year. While being deemed by some as a lagging report, the Beige Book has usually served as a helpful indicator to FOMC policy decisions on monetary policy.
The Beige Book isn't considered to be a big market mover. It is a gauge on the strength of the economy and not a commentary on the views of Fed members. Occasionally it can move markets if the findings are a big surprise from analyst expectations.

Release Date: Two Wednesdays before every FOMC meet. 8 times a yr
Release Time: 19:15 GMT

Business Inventories and Sales

Business inventories and sales figures consist of data from other reports such as durable goods orders, factory orders, retail sales, and wholesale inventories and sales data. Inventories are an important component of the GDP report because they help distinguish which part of total output produced (GDP) remained unsold. As a result, this presents us with important clues on the future direction of the economy. Before computerization allowed companies to trim inventories and use minimal stock on hand, inventory build up was indicative of falling demand and potentially a recession. If inventories decline significantly over a three month period it is an indication that demand has picked up and that production will have to increase to restock.

Release Date: Second Friday of each month
Release Time: 13:30 GMT

Capacity Utilisation

Measures how much of the productive potential of the economy is being used. A level of 85% is a good balance of growth and inflation; anything above this level raises inflationary fears.

Release Date: Around the 14th of each month
Release Time: 13:30 GMT

CBI Surveys

Britains largest organisation of business employers, aims at creating and sustaining favourable conditions for their optimal competition and prosperity. The CBI publishes monthly and quarterly surveys, on past, current and future assessments on the manufacturing and services sectors. The indexes reflect respondents views on various items such as, output, sales, prices, inventories, and export/import orders.

Release Date: Around the 27th of each month
Release Time: 11:00 GMT

Chicago PMI

A survey of Chicago-based managers which covers prices, durable goods orders and inventories. It is closely-watched since it is announced before the National Association of Purchasing Managers' index (NAPM). The Chicago figure gives a good idea of what the national figure will be.

Release Date: Around the end of each month
Release Time: 15:00 GMT

Construction Spending

Construction spending data comes out after most of the housing data has already been released; its influence is therefore diminished. The indicator sometimes shocks the market if it shows a sudden pick-up in the amount spent on new home construction.

Release Date: Around the beginning of each month
Release Time: 15:00 GMT

Consumer Confidence Index (CCI)

The Consumer Confidence Index (CCI) is put out by The Conference Board. (There are others such as the Michigan Sentiment Index which is put out monthly by the University of Michigan). The Consumer Confidence Survey is based on a sample of 5,000 U.S. Households and is considered one of the most accurate indicators of confidence. It even goes as far as calculating the number of "help wanted" ads in newspapers to detect how tight the job market is.

The idea behind consumer confidence is that when the economy warrants more jobs, increased wages, and lower interest rates, it increases our confidence and spending power. Should the index move above or below the moving average it is a good indication that consumer confidence is significant. Month to month changes are not considered to have as great an impact as the overall trend.

Confidence is looked at closely by the Federal Reserve when determining interest rates, which affect stock prices. Lowering interest rates make it easier to borrow which ultimately supports consumer spending and higher confidence - something the stock markets love to hear. Keep in mind that lowering interest rates is not an instantaneous confidence booster, it can take 6-8 months for rate cuts to work their way into the economy. On the other hand, if confidence is rising rapidly it could trigger higher inflation.

Release Date: Around the 25th of each month
Release Time: 15:00 GMT

Consumer Credit

Consumer Credit is an indicator of consumer spending and demand. It reflects the amount of credit Americans are using, month-on-month, through credit card purchases, personal loans, hire purchase orders or payment plans. A high consumer credit figure suggests the US consumer is not concerned to run up bills in order to finance his/her consumer demands. But the figure is often revised and is seasonally volatile it goes up before Christmas. It is therefore is given only cursory attention.

Release Date: Around 7th of each month
Release Time: 20:00 GMT

Consumer Price Index (CPI)

The Consumer Price Index (CPI) is considered the most widely used measure of inflation and is regarded as an indicator of the effectiveness of government policy. The CPI is a basket of consumer goods (and services) tracked from month to month (excluding taxes). Items included reflect prices of food, clothing, shelter, fuels, transportation, health care and all other goods and services that people buy for day-to-day living. CPI figures are collected in 87 areas throughout the U.S. from over 22,000 retail and service establishments. Rent paid by individuals is also collected from 50,000 landlords and tenants.

The CPI is one of the most followed economic indicators and considered to be a big market mover. A rising CPI indicates inflation, a large increase is something financial markets don't like to hear. Inflation is the rate at which the general price for goods and services is rising, and subsequently our purchasing power is falling. As inflation rises this means that every dollar you own will buy a less percentage of a good or service. The Federal Reserve typically battles rising inflation by increasing short term interest rates. Rising rates are frowned upon by corporations and investors because the cost of borrowing money increases.

Release Date: Second Friday of each month
Release Time: 13:30 GMT

Current Account

The most important part of international trade data. It is the broadest measure of sales and purchases of goods, services, interest payments and unilateral transfers. The entire merchandise trade balance is contained in the current account.

Durable Goods Orders

These include large ticket items such as capital goods (machinery, plant and equipment), transportation and defence orders. They are extremely important in that they anticipate changes in production and thus, signal turns in the economic cycle.

But the large size of these items (aircrafts and civilian orders) means that they present equally large changes, which makes them extremely volatile. This also gives rise to sizeable revisions in the subsequent periods once more complete data becomes available one week later. Durable goods data are better used when omitting defence orders and transportation orders, while calculating a three-month moving average, and a year-to-year percent change.

Release Date: Around the 26th of each month
Release Time: 13:30 GMT

Employment Cost Index (ECI)

The Employment Cost Index is a quarterly survey of employer payrolls in the final month of the quarter. The ECI tracks movement in the cost of labour which includes wages, fringe benefits, and bonuses for employees at all levels of involvement in the companies. Wages and salaries make up approximately 75% of the indexes value. The one benefit not included in the ECI is employee stock options, which actually don't cost employers anything to issue.

This indicator isn't the most watched, but it is among a select group of indicators that have enough power to move the markets, especially during inflationary times. The idea behind the ECI is that as wage pressures increase so does inflation. This is mainly because compensation tends to increase before companies increase prices for consumers (inflation).

The ECI is particularly useful when it's compared to inflation and productivity growth rates. Ideally you would like to see wages increase at a similar rate as inflation and productivity. If employee costs are rising but productivity is not then it could spell trouble for companies.

Release Date: The last Thursday of Apr, Jul, Nov and Jan
Release Time: 13:30 GMT

European Central Bank (ECB)

The European Central Bank (ECB) and the national central banks together constitute the Eurosystem, the central banking system of the euro area. The main objective of the Eurosystem is to maintain price stability: safeguarding the value of the euro.

Release Date: First Thursday of each month
Release Time: 12:45 GMT

Existing Home Sales

The number and value of old homes sold. Can give markets an insight into the strength of consumer confidence and spending power. Existing home sales also offer evidence of inflationary pressure if prices are rising rapidly.

Release Date: Around the 25th of each month
Release Time: 15:00 GMT

Factory Orders and Manufacturing Inventories

In many respects this report is a rehash of the durable goods release that became available a week earlier. However, the factory orders report merits review because it also contains data on orders and shipments of nondurable goods, manufacturing inventories, and the inventory/sales ratio. Order data is useful because it tells us something about the likely pace of production in the months ahead. They are extremely volatile and can fluctuate by three or four percent in any given month. They are subject to sizeable revisions and are very difficult to forecast.

Release Date: Around the 4th of each month
Release Time: 15:00 GMT

Federal Open Market Committee (FOMC)

The body that sets the interest rate and credit policies of the Federal Reserve System.
The FOMC is the most important monetary policymaking body of the Federal Reserve System. The current chairman is Alan Greenspan.

The FOMC is composed of the seven members of the Board of Governors and five Reserve Bank presidents. The president of the Federal Reserve Bank of New York serves on a continuous basis, while the presidents of the other Reserve Banks serve one-year terms on a rotating basis.

Release Date: First Wednesday of the month
Release Time: 19:15 GMT

Gross Domestic Product (GDP)

GDP is a gross measure of market activity. It represents the monetary value of all the goods and services produced by an economy over a specified period. This includes consumption, government purchases, investments, and the trade balance (exports minus imports). The GDP is perhaps the greatest indicator of the economic health of a country. It is usually measured on a yearly basis, but quarterly stats are also released. The Commerce Department releases an "advance report" on the last day of each quarter. Within a month it follows up with the "preliminary report" and then the "final report" is released another month later.

The most recent GDP figures have a relatively high importance to the markets. GDP indicates the pace at which a country's economy is growing (or shrinking). If GDP growth fails to meet or beat the market expectations stocks can temporarily pay the price. Traditionally, the U.S. Economy's average growth rate has been between 2.5 - 3%. Economists believe that this range represents the sustainable long-run growth rate of output.

Release Date: Last day of the Quarter
Release Time: 15:30 GMT

Help Wanted Index

An index published monthly by the Conference Board that shows the total number of help-wanted advertisements occurring monthly in 51 major newspapers from around the country.

This is an indicator of strength in the labour markets. Large numbers of ads imply that the labour market is strong and wages will need to increase in order to attract more workers. In contrast, if the number of ads are few, the labour market is weak and wages will decrease as workers will be willing to accept lower wages for jobs.

Release Date: Last Thursday of each month
Release Time: 15:00

Housing Starts / Building Permits

This economic indicator tracks how many new single-family homes or buildings were constructed throughout the month. For the survey each house and each single apartment are counted as one housing start, (a building with 200 apartments would be counted as 200 housing starts). The figures include all private and publicly owned units, with the only exception being mobile homes which are not counted. Most of the housing start data is collected through applications and permits for building homes. The housing start data is offered in an unadjusted and a seasonally adjusted format.

This indicator isn't a huge market mover, but it has been reported by U.S. Census that the housing industry represents over 25% of investment dollars and a 5% value of the overall economy. Housing starts are considered to be a leading indicator, meaning it detects trends in the economy looking forward.

Declining housing starts show a slowing economy, while increases in housing activity can pull an economy out of a downturn. However, a considerably stronger report is not good because it can be interpreted that growth is extremely strong and could lead to high inflation. The fact that housing is closely related to mortgage rates means that housing starts data has a strong effect on the bond market and predictions for interest rate movements. As interest rates rise it is expected that housing starts will decline.

Release Date: Around the middle of the following month.
Release Time: 15:30 GMT

IFO

Germanys leading survey of business conditions. Published monthly by the Institute for Economic Research, one of the largest economic think tanks in Germany, the IFO Business Climate Index is a widely followed leading indicator of economic activity known for its track record in calling economic turns in German economic growth. The index surveys over 7,000 enterprises on their assessment of the current business situation and their resulting plans for the short-term. In addition to this aforementioned headline index, there is the Current Situation Index and Business Expectations Index.

Release Date: Around the end of each month
Release Time: 13:00 GMT

Index of Industrial Production

This is an important measure of the nation's industrial output. It is expressed as a rate of change from the previous month, and gives markets a good idea of the strength of the US manufacturing sector. The index comprises data from the market and from industrial sectors. The market grouping consists of final products (consumer goods, business equipment, and construction supplies), intermediate products and materials. The industrial grouping covers manufacturing (divided into durable and non-durable goods), mining and utilities.

Changes in industrial production are a significant indicator of manufacturing sector trends. However, from month to month the figures can be volatile. With this in mind it is better to follow either the three-month moving average of the monthly change or year-on-year changes.

Release Date: The second Friday of each month
Release Time: 14:15 GMT

Initial Claims (Jobless Claims)

The numbers are released each week by the US Department of Labour and measure the weekly change in state applications for unemployment benefits. The financial markets regard the report as a good indicator of changing trends in the labour market and in the economy as a whole.

However, the figures do not always represent a true picture of economic trends. They are often distorted by short-term factors such as state and federal holidays. Therefore, a longer-term moving average of initial claims is a more reliable indicator.
Initial claims also give hints about the non-farm payroll. If initial claims are down consistently over a month, there is a good chance the non-farm payroll will come in high.

Release Date: Every Thursday
Release Time: 13:30 GMT

Institute for Supply Management (ISM)

This is leading survey on US manufacturing activity. The report is released on the first working day of the month, providing the first detailed look at the manufacturing sector before the release of the all-important employment report.

Highly valued for its timeliness and breadth of information, the headline figure is a function of six major components: prices paid; new orders; supplier deliveries; production, inventories and employment. Note that the latter three components reflect supply forces, while the former three cover demand forces. Watching the relative trend of these two groups (demand and supply) sheds light on the balance between demand and supply forces, and hence, provides insight on the Federal Reserves policy decisions since they lend much importance to these balances. The Prices Paid component is widely watched because it assesses price pressures ahead in the sector. A figure of 50 or above indicates expansion in the sector, while a number below 50 suggest a contraction.

Release Date: First Thursday of the month
Release Time: 15:00 GMT

Leading Indicator

The leading indicator piles together already-announced data for new orders, jobless claims, money supply, average workweek, building permits, stock prices and durable goods. Its predictability gives it a low grade.

Release Date: Beginning of the month
Release Time: 13:30 GMT

Michigan Consumer Sentiment

The Michigan consumer sentiment index is a survey of consumer confidence conducted by the University of Michigan at a national level. There are two reports a month: a preliminary released around the 10th of the month for that month, and a final released on the first of the next month for the prior month. The index is nothing more than a snapshot of whether consumers feel like spending their money or not.

Release Date: The second Friday of each month
Release Time: 14:45 GMT

Monetary Policy Committee (MPC)

Interest rates are set by the Monetary Policy Committee.

The MPC studies all the available economic data and looks at a range of domestic and international economic and monetary factors. There is a briefing meeting prior to the MPC where presentations are made to the MPC by the Bank's economists and its regional agents.
The Bank's Monetary Policy Committee (MPC) is made up of the Governor, the 2 Deputy Governors, the Bank's Chief Economist, the Executive Director for Market Operations and 4 external members appointed directly by the Chancellor.

Release Date: Wednesday / Thursday at the beginning of the month
Release Time: Thursday 12 Noon

Money Supply

The entire quantity of a country's bills, coins, loans, credit, and other liquid instruments in the economy.

Money supply is divided into three categories, M1, M2, and M3, according to the type and size of account the instrument is kept in. This number is important to economists trying to understand how policies will affect interest rates and growth.

Release Date: Around the beginning of each month
Release Time: 09:30 GMT

New Home Sales

Monthly data new home sales data are released for the nation as a whole and for four geographical areas the Northeast, the Midwest, the South, and the West. The report also contains information on home prices, and number of houses for sale. Housing is a crucial segment of the economy because it signals changes in consumer spending patterns that are indicative of economic activity. Volatility and revisions, however, are common in the report. The report is seasonally variable. A four-month moving average or a year-on-year measure is more useful.

Release Date: Around the 26th of each month
Release Time: 15:00 GMT

Non-Farm Payroll (NFP)

Non-farm payroll (NFP) is a monthly survey of the number of new jobs created. It is a very good indicator of the unemployment rate. NFP is the market mover, the most closely-watched by all in the bond and foreign exchange markets.

NFP is also seen as having a reasonable correlation with GDP growth. There is a rule of thumb that a rise of 200,000 a month equates to a rise of 3% in GDP.

Release Date: First Friday of each month
Release Time: 15:30 GMT

Personal Consumption

Personal consumption is an indication of the amount Americans spend on goods and services in a given month. The number is pre-empted by retail sales which tend to give a more thorough view of similar expenditure.

Release Date: Around the end of each month
Release Time: 13:30 GMT

Personal Income and Personal Consumption Expenditures (PCE)

Personal Spending, also known as PCE, represents the change in the market value of all goods and services purchased by individuals. It is the largest component of GDP. Personal income represents the change in compensation that individuals receive from all sources including: wages and salaries; proprietors income; income from rents; dividends and interest; and transfer payments (Social Security, unemployment, and welfare benefits). The release of these two figures gives you the savings rate, which is the difference between disposable income (personal income minus taxes) and consumption, divided by disposable income. The ever-declining savings rate has become a key indicator to watch as it signals consumer spending patterns.

Release Date: Around the end of each month
Release Time: 13:30 GMT

Philadelphia Fed Index (Business Outlook Survey)

The Philadelphia Fed Index is a monthly survey of manufacturers located around the states of Pennsylvania, New Jersey and Delaware. Companies surveyed indicate the direction of change in their overall business activity and in the various measures of activity at their plants. They are asked questions regarding employment, working hours, new and unfilled orders, shipments inventories, delivery times, prices paid, and prices received. The survey has been conducted each month since May 1968. The index signals expansion when it is above zero and contraction when below. It takes the difference between the number of positive and negative responses: if 30% of manufacturers think prices will go up and 39% think they will go down, the prices paid indicator would be 9.

The Philadelphia Fed Index is considered to be a good indicator of changes in everything from employment, general prices, and conditions within the manufacturing industry. Manufacturing is considered to be a precursor to future economic conditions and it lays the groundwork toward economic recovery. For example, in a poor economy if manufacturing starts to pick up there is an expectation that the economy will soon follow behind.

Release Date: Around the 17th of each month
Release Time: 15:00 GMT

Producer Price Index (PPI)

The Producer Price Index is not as widely used as the CPI, but it is still considered to be a good indicator of inflation. Formerly known as the "Wholesale Price Index", the PPI is a basket of various indexes covering a wide range of areas affecting domestic producers. The PPI includes industries such as goods manufacturing, fishing, agriculture, and other commodities. Each month approximately 100,000 prices are collected from 30,000 production and manufacturing firms.

There are three primary areas that make up the PPI. These are industry-based, commodity-based, stage-of-processing goods.
The PPI is another important indicator which investors pay close attention to. It is not as strong as the CPI in detecting inflation, but because it includes goods being produced it is often a forecast of future CPI releases.

The PPI is also used extensively by company officials for determining future supply or sales contracts. For example, a sudden rise in the PPI could mean that future sales contracts will also rise.

Release Date: Second Thursday of the month
Release Time: 13:30 GMT

Productivity

An indication of output per employee. While productivity is helpful in the analysis of an economy, it is often misleading. This is because a reduction in personnel can, at times of recession for example, lead to an increase in productivity. Thus output per employee may seem encouraging while overall economic performance is declining.

Purchasing Managers Index (PMI)

The Index is widely used by industrialised economies to assess business confidence. Germany, Japan and the UK use PMI surveys for both manufacturing and services industries. The numbers are arrived at through a series of questions regarding Business activity, New Business, Employment, Input Prices, Prices Charged and Business Expectations. In addition to the headline figures, the prices paid components is highly scrutinized by the markets for evaluating pricing power and inflationary risks. Also see National Association of Purchasing Managers (NAPM). A PMI index over 50 indicates that manufacturing is expanding while anything below 50 means that the industry is contracting.

The PMI report is an extremely important indicator for the financial markets as it is the best indicator of factory production. The index is popular for detecting inflationary pressure as well as manufacturing economic activity, both of which investors pay close attention to. The PMI is not as strong as the CPI in detecting inflation, but because the data is released one day after the month it is very timely.

Should the PMI report an unexpected change, it is usually followed by a quick reaction in stocks. One especially key area of the report is growth in new orders, which predicts manufacturing activity in future months.

Release Date: The first business day of the month
Release Time: 15:00 GMT

Retail Sales

Measures the percentage monthly change in total receipts of retail stores, and includes both durable and non-durable goods. It is the first real indication of the strength of consumer expenditure. The limits of the retail sales figure, however, lie in the fact that it focuses on goods while ignoring services and other items such as insurance and legal fees. In addition, the report is stated in nominal terms rather than real, thus, not accounting for inflation. The retail sales figure is also subject to sizeable revisions, even when excluding auto sales (core retail sales). Every month the data is released showing the percent change from the previous month data. A negative number indicates that sales decreased from the previous months sales.

This indicator is a big market mover, especially for retail stocks. The data is very timely because retail sales data is released within 2 weeks of the previous month.

Release Date: Second Thursday of each month
Release Time: 13:30am GMT

Unemployment

Unemployment is a key indicator. It has a lowly rating because there are previews to it that paint most of the picture before the actual figures are released. Most important of the previews are the initial claims figures, which report the numbers looking for unemployment benefit. All the same, unemployment can still contradict expectations and cause upsets.

Release Date: Around the 7th of each month
Release Time: 15:30 GMT

Wholesale Trade

The trade conducted between wholesalers and the retail sector. Not watched particularly closely by markets, but gives an idea of economic activity that may later filter through to the wider economy.

Release Date: Around the 7th of each month
Release Time: 15:00 GMT

Rollovers in Forex

2007-11-30T12:15:00.000-08:00

Rollovers in Forex

by Mark Mc Rae

Even though the mighty US dominates many markets, most of Spot Forex is still traded through London in Great Britain. So for our next description we shall use London time. Most deals in Forex are done as Spot deals. Spot deals are nearly always due for settlement two business days later. This is referred to as the value date or delivery date. On that date the counter parties theoretically take delivery of the currency they have sold or bought.

In Spot FX the majority of the time the end of the business day is 21:59 (London time). Any positions still open at this time are automatically rolled over to the next business day, which again finishes at 21:59.

This is necessary to avoid the actual delivery of the currency. As Spot FX is predominantly speculative most of the time the traders never wish to actually take delivery of the currency. They will instruct the brokerage to always rollover their position.

Many of the brokers nowadays do this automatically and it will be in their policies and procedures. The act of rolling the currency pair over is known as tom.next, which stands for tomorrow and the next day.

Just to go over this again, your broker will automatically rollover your position unless you instruct him that you actually want delivery of the currency. Another point noting is that most leveraged accounts are unable to actually deliver the currency as there is insufficient capital there to cover the transaction.

Remember that if you are trading on margin, you have in effect got a loan from your broker for the amount you are trading. If you had a 1 lot position you broker has advanced you the $100,000 even though you did not actually have $100,000. The broker will normally charge you the interest differential between the two currencies if you rollover your position. This normally only happens if you have rolled over the position and not if you open and close the position within the same business day.

To calculate the broker's interest he will normally close your position at the end of the business day and again reopen a new position almost simultaneously. You open a 1 lot ($100,000) EUR/USD position on Monday 15th at 11:00 at an exchange rate of 0.9950.

During the day the rate fluctuates and at 22:00 the rate is 0.9975. The broker closes your position and reopens a new position with a different value date. The new position was opened at 0.9976 - a 1 pip difference. The 1 pip deference reflects the difference in interest rates between the US Dollar and the Euro.

In our example your are long Euro and short US Dollar. As the US Dollar in the example has a higher interest rate than the Euro you pay the premium of 1 pip.

Now the good news. If you had the reverse position and you were short Euros and long US Dollars you would gain the interest differential of 1 pip. If the first named currency has an overnight interest rate lower than the second currency then you will pay that interest differential if you bought that currency. If the first named currency has a higher interest rate than the second currency then you will gain the interest differential.

To simplify the above. If you are long (bought) a particular currency and that currency has a higher overnight interest rate you will gain. If you are short (sold) the currency with a higher overnight interest rate then you will lose the difference.

I would like to emphasise here that although we are going a little in-depth to explain how all this works, your broker will calculate all this for you. The purpose of this article is just to give you an overview of how the forex market works.

Good Trading

Make The Currency Cross Your Boss

2007-11-30T12:12:00.000-08:00

Make The Currency Cross Your Boss
by Boris Schlossberg, Senior Currency Strategist, FXCM

In the stock market, a trader has the opportunity to choose from more than 5,000 companies - hundreds of which will rally in the most vicious of bear markets and thousands of which will crash during the strongest of bull runs. But in the currency market, such divergent possibilities do not seem to exist. In this article, we'll look at how forex traders can use currency crosses to make a wide variety of trades that are unaffected by the day-to-day fluctuations of the greenback.

All Currency Bets Are the Same
When dealing in the major currency pairs, most traders are presented with only one choice: dollar bull or dollar bear? Regardless of whether a trader is long the GBP/USD (British pound-U.S. dollar) or the EUR/USD (euro-dollar), or short the USD/CHF (dollar-Swiss franc) or USD/JPY (dollar-Japanese yen), the unifying theme in all of these positions is that the trader is bearish on the greenback. Therefore, the question of which of the four trades should be taken is immaterial, since all of them will likely be profitable if the dollar is weak and all will lose money if the dollar is strong.

Granted, this may sound like a gross oversimplification of the forex market. We'll be the first to acknowledge that some currencies can and do challenge this paradigm - the Canadian dollar is one good recent example of such a dynamic. Buoyed by skyrocketing oil prices, the loonie has turned into a petrocurrency as Canada has become the United States' No.1 supplier of crude. As a result, while other major currencies like the euro, the yen and the pound have recently declined against the U.S. dollar, the Canadian dollar has gained in value. However, this is an exception that proves the rule.

To better understand how this works, let's take a look at the two charts below. Figure 1 looks at the performance of the seven most liquid currency pairs in forex, composed of the four majors:

EUR/USD
USD/JPY
GBP/USD
USD/CHF

and the three commodity pairs:

USD/CAD
AUD/USD
NZD/USD

Figure 1 looks at activity on a single trading day - Oct 12, 2005. To normalize the data, we converted every pair so that its performance could be analyzed accurately. Typically, if the dollar were weak, the EUR/USD would rise and the USD/CHF would decline; however, in Figure 1 we have made the adjustment so that the returns are consistent vis a vis the dollar.

Figure 1 - In forex, some currency pairs are quoted in terms of the U.S. dollar (e.g. EUR/USD), while others are not (e.g. USD/CHF). By inverting the pairs that are not expressed in terms of the dollar, we can compare the strength/weakness of each pair relative to the dollar.

Figure 2 looks at activity on the same trading day - Oct 12, 2005 - for the Dow Jones Industrial Average.

Figure 2 - In FX, most traders (those trading the seven most liquid currency pairs) are presented with only one choice - dollar bull or dollar bear - but the stock market is less straightforward. As this chart shows, even when an index like the DJIA is down overall, many of its stocks can be up, making it harder to take a purely bearish or bullish outlook.

Both of these charts clearly illustrate that while the stock market is truly a market of stocks, the currency market is really a market of dollars and anti-dollars. The central reason why this is so is that the dollar serves as the reserve currency for the world's central banks. Therefore, when speculators are bullish on the dollar, capital will flow from all the major currencies into the greenback and vice versa when the sentiment reverses.

Crosses Offer More Possibilities
If you look closely at Figure 1, however, you'll notice that the capital flows are far from uniform. Some currencies appreciate substantially against the dollar, while others gain barely a few basis points. This difference in performance against the greenback creates profit opportunities for market players who choose to trade in currency crosses. Crosses are simply a measure of the relative strength of an individual currency against the dollar. Crosses are distinguished by the fact that they do not include the dollar as either the numerator or the denominator of the pair. As such, they offer traders a tremendous opportunity to make far more nuanced bets in the currency market than the simple pro- or anti-dollar trade.

What makes crosses especially interesting to currency traders is the fact that they can provide much cleaner trend or range signals which will be unaffected by the day-to-day oscillations of the greenback.

To better understand how crosses work, let's examine the following two charts, which look at data over the same period of time (from July 1, 2005 to Oct 14, 2005). While the most liquid financial instrument in the world - the EUR/USD - has done nothing but range aimlessly during the period in question, frustrating both bulls and bears (see Fig. 3), the CAD/JPY has displayed one of the purest trends in recent memory, gaining almost 1,000 points without any material retracement (see Fig. 4).

Figure 3 - The EUR/USD has traveled between support and resistance, making it very frustrating for bulls and bears alike.

Figure 4 - Traders of currency crosses were able to profit from the prolonged uptrend of the CAD/JPY.

Why did the CAD/JPY rally? As we mentioned earlier, the Canadian dollar is a petrocurrency that has received a tremendous boost from the stratospheric rise in the price of crude. The yen, on the other hand, is the principal victim of high oil prices because it is the only highly industrialized country in the world that must rely on imports for 99.5% of its petroleum needs. The CAD/JPY, therefore has an 89% correlation with the price of oil.

Canny traders who bet on an oil rally could have expressed that opinion very effectively in the currency market through a long CAD/JPY position. Even better, they would have harnessed a positive yield differential in the process. With the loonie currently yielding 2.75%, while the yen rates remain at 0%, the interest rate differential alone was 275 basis points or 27.5% annualized using a standard 10:1 leverage factor. (This essentially means that since FX traders can use $1 of capital to control $10 worth of currency, the gain from the 275 basis point differential will be 10 times larger than if traders did not use leverage.)

Carry or Capital Gains
Crosses can be as volatile as the most heavily-traded stocks during the heyday of the Nasdaq bubble or as sedate as a 'AAA'-rated dividend-yielding utility share on the NYSE. Trading in crosses can focus on carry strategies that try to profit from interest rate differentials between the currencies or it can be focused on pure capital gains speculation. Trades can also be based on economic analysis or political news. Some crosses can trend for months, while others will be highly range-bound. In short, the possibilities with currency crosses are endless. Let's look at the charts below to see some examples of recent trades in the crosses that demonstrate these ideas.

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The Carry Trade
One of the most popular trades in foreign exchange is the carry trade, which involves going long a high-yielding currency against a low-yielding one. Looking at the seven most liquid crosses in the world, no pair has shown a greater interest rate differential than the NZD/JPY pair. In mid-Oct 2005, the New Zealand dollar, nicknamed the "kiwi", yielded 6.75% (the Reserve Bank of New Zealand subsequently increased that rate to 7% at the end of October). The Japanese yen., on the other hand, yielded 0% (as of Oct 2005), and the Bank of Japan's zero interest rate monetary policy is expected to remain in effect until all vestiges of deflation are gone from the Japanese economy. The spread between the currencies was a whopping 675 basis points, and as a result, carry trade speculators plowed into the cross, increasing its value by 400 pips between July and Oct 2005.

Figure 5 - The NZD/JPY pair gained momentum in the three months shown here in response to widespread speculation that the NZD rate would increase to 7% in Nov 2005. Carry trade speculators plowed into the cross in order to gain exposure to this higher rate differential, causing the NZD/JPY to increase in value.

The Political Trade
In mid-Sept 2005, both Japan and Germany had elections. In Japan, Prime Minister Junichiro Koizumi ran on a reform agenda that called for the privatization of the Japanese postal service, a quasi-banking institution with $3 trillion in deposits and 25,000 branches. In Germany, the reform-minded candidate Angela Merkel ran against the standing Chancellor Gerhard Schroeder. While Koizumi's message resonated well with the Japanese voters as he headed to an overwhelming win, Merkel's victory over Schroeder was hard-fought - the two contenders were locked in a struggle for leadership for more than a month after the German elections were initially held. In Sept 2005, therefore, the EUR/JPY cross presented a tremendous profit opportunity as a de facto "Koizumi/Schroeder spread". Indeed, from Sept 9 to Sept 12, the cross tumbled nearly 200 points as traders bid up the yen and shorted the euro as a response to the election results.

Figure 6 - The chart above shows the weakness in the euro which could be attributed in part to the uncertainty over the outcome of the German elections. FX traders were more inclined to place their money in the Japanese yen, because the political situation in Japan was more certain.

The Economic Trade
Consistent disparities in economic performance can sometimes offer very profitable trades in the crosses. A case in point is the price action in the second half of 2005 in the EUR/CHF currency cross. The massive declines in the two currencies during the first half of 2005 were beneficial for both the euro zone and Switzerland since both regions are heavy exporters and both generate substantial trade surpluses. However, the smaller and more nimble Switzerland did not suffer from the political and institutional disarray that pervaded the euro zone after the rejection of the EU Constitution in the summer of 2005. With much better unemployment numbers (3.8% in Switzerland vs. 9.9% in EU) and faster growing retail sales (4.7% vs. 0.9%), Switzerland was clearly outperforming its much larger neighbor next door. As the realization of this fact began to permeate the market, the EUR/CHF cross (one of the least volatile crosses in the market) declined by over 100 points in the period between late Sept and early Oct 2005 shown in Figure 7.

Figure 7 - The cross shown here illustrates Switzerland's resilience to the economic and political hardships that were happening in the euro zone.

The Volatility Trade
If you are a trader who likes volatility and lots of it, nothing provides more action than the GBP/JPY cross. Trading this cross is akin to trading a volatile technology stock; it often moves several hundred points in a day. One of the key reasons for such wild price action is that GBP/JPY is also a very popular carry trade. With U.K. rates at 4.50% in Oct 2005 and Japan's rates at 0%, the interest rate differential was 450 basis points.

A slowdown in the U.K. economy caused the Bank of England to lower rates by 25 basis points in Sept 2005, and with the market highly uncertain of whether this was a one-off move or a hint of more rate cuts to come, trading in the GBP/JPY looked set to be especially turbulent, thus providing volatility-seeking traders with plenty of opportunities.

Figure 8 - There are currency crosses to suit all types of traders. This chart shows the GBP/JPY, which is one of the most volatile crosses.

Conclusion
The examples discussed here should give you a sense of the variety of trades that are possible using cross currencies in the FX market. Typically, 90% of all trading by volume in forex takes place across the four major currency pairs. However, for traders willing to step out of the crowd and explore a different path, trading in currency crosses can provide a multitude of profitable opportunities and should become a standard part of any FX trader's arsenal of ideas.

by Boris Schlossberg

Learning about carry trades

2007-10-22T00:13:00.001-07:00

Learning about carry trades

One of the areas I've been pretty ignorant about in the world of forex is carry trading, which relies on interest rate differentials between currencies to profit from interest rather than fluctuations in the actual currency prices (though those can certainly contribute nicely to any interest gains if they trend in the right direction).

As usual, the Oanda forums proved to be a trove of information on the subject: currently I'm in the midst of this thread, and am finding the posts by Interest-Hawk and the excellently named HAPHAZARD_TRADING particularly interesting.

Interest-Hawk describes the steady profits he's been making with a long position in the GPB/JPY pair, which will pay out just over $22 a day per lot in interest. As he describes his strategy, "I trade using FXCM (a topic for another thread) and they require a 2% margin to earn interest. For me, that comes down to every 100k lot costs me $2000. 2k per lot, simple as that. Each of those lots then pays me exactly $22.70 per day, every day of the year in rollover interest. That breaks down to doubling my initial investment (In interest ONLY) every 88 days."

That got my attention pretty quickly, as did HAPHAZARD_TRADER's list of the currency pairs in his interest-positive basket:

"GBP/CHF, LONG
GBP/JPY, LONG
AUD/JPY, LONG
USD/JPY, LONG
USD/CHF, LONG
EUR/HUF, SHORT, for those who like 100 pip spreads

Not all at once and all the time, but I'll keep trading them so long the INTEREST keeps rollin in."

Carry trading is probably not a great strategy for those who are impatient, short-term in outlook, or addicted to the thrill of freqent trading. That said, I do see an opportunity for a hybrid strategy that combines trading and carrying, with the potential to benefit from both. Here's how I would go about designing it:

Identify a pair like GPB/JPY with a high interest differential
Create a rule-based trading strategy for it as I would for any other pair, but with the exception that...
This strategy would focus only on interest-positive trades: in the case of the GBP/JPY, long trades.
Once I had a working trading strategy that I felt comfortable with, regardless of interest, I'd then start placing long trades with it. If all went well, I'd be gaining interest while hopefully profiting from uptrends in the GBP price as well.

In this type of hybrid system, any losses in trading would be offset by gains in interest, and in the best case, interest and trading gains would coincide to generate significant profits...especially when daily compounding enters the picture.

Another strategy is to open inversely correlated positions that are both interest-positive. This way, any losses in one currency's price would be (roughly) offset by gains in the other, while both earned interest. This is the idea behind a balanced basket of interest-earning currencies.

But I'm still very new the whole carry trade concept, so there's a still a lot to learn. If I've made any amateurish errors here, any carry traders in the audience are welcome to correct them in the comments below.

Forex may be chaotic

2007-10-21T23:54:00.000-07:00

Forex may be chaotic...but some things are still predictable

I was just reading this post over at Trader Rich's Forex Project about a study at MIT that concluded that "treasury bonds are random, the stock market is correlated, and forex is chaotic." Firstly, let me say I haven't actually read the study in question, and probably never will. What I have read is Rich's summary of the study author's summary of his findings in Currency Trader Magazine. Also I've never studied chaos theory, higher math or physics. So obviously I'm extremely well-qualified to comment on this research in a thoughtful, informed, and in-depth manner. So here goes...

While I agree that a lot of forex market activity appears chaotic, and as soon as you come up with a predictive rule the market breaks it, there are still a few things you can predict with some accuracy amid all the chaos. And these are the things that keep me trading forex. Off the top of my head, they are:

Trading range: I can say with reasonable confidence that the trading range of the EUR/USD tomorrow will be somewhere between 30 and 150 pips. Occasionally it may be more, occasionally less. But it will almost certainly not be 500 pips. Or 1000 pips. Nor will it flatline and refuse to move at all. Now a currency whose range varied from 10 to 1000 pips a day on a fairly unpredictable basis...that would be chaotic.

Reaction to certain news events: some events will move the market. Period. What direction, and how many pips, can be hard to prediect. But I can predict with a high degree of confidence that there will continue to be news events that shake things up periodically.

Periodic emergence of trends: very real, very tradeable trends will emerge from the chaos every so often, and in all likelihood will continue to do so. Just looking at a price chart without a single fancy indicator on it can tell you this.

If you place trades long enough you'll eventually get one right. This is the principle behind the Martingale strategy. I'm not saying it's a good strategy to use, but it's based on a statistically valid and predictable observation. Chaos or no chaos, the odds will eventually swing in your favor.

Buying some currency pairs pays you interest. Holding others costs you interest. This is what carry trading is all about.

Someone who routinely takes on too much risk when trading in chaotic conditions probably won't last as long as someone who knows exactly how much risk they can afford to take.

Someone with a clear head can combine observations like these into a trading strategy with decent odds of paying off in the long run. Someone whose outlook is clouded by wishful thinking, impatience, inconsistency, lack of discipline or impulse control, and any other problems of the compulsive gambler doesn't have a chance in the world.

Forex can be boring for long periods. Whether that's chaotic or not I can't really say. But it's certainly predictable.

I'm sure the chaos theorists wouldn't disagree with any of this, and would point out why chaos theory allows for all of these possibilities. But I'm not writing for them - I'm writing for the traders out there like me who see a statement like "forex is chaotic" and think they must be crazy to keep chasing the market if the MIT scientists say it's a giant chaotic whirlpool ready to suck your accounts dry. So if I've made any of you feel a little better, I've done my job. Enjoy the chaos!

The Forex Market - An Insight

2007-10-21T03:11:00.000-07:00

The Forex Market - An Insight

Foreign Exchange trading is a fast, exciting world that offers huge potential to the investor...

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There's a great beginners section to help you get started, check it out - forex exchange

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